When a Major Wall Street Firm Says “Sell Everything,” Should You Buy?

It’s not every day a major Wall Street firm says “Sell Everything.” But that’s what Royal Bank of Scotland (RBS) just did.

The British firm warned of a collapse in China, a dangerous surge in debt globally and ongoing problems in the commodities market. It went on to say, “This is about return of capital, not return on capital. In a crowded hall, exit doors are small.” And it forecast a drop of up to 20% for U.S. and European stock markets, as well as a plunge in oil to as little as $16 a barrel.

Naturally, Dow futures reacted … by rallying almost 200 points in the early going and closing up nearly 120. In other words, everyone decided that sentiment must have gotten too bearish and went to work buying stocks because of it.

But are those contrarians right? Is a “Sell Everything” call the most bullish thing for this market?

At least one firm, Bank of America Merrill Lynch, believes so. The firm just said its “Bull & Bear Index” hit a very negative 1.3, which it called a contrarian buy signal. The Nasdaq Composite Index just fell eight days in a row, a relatively rare occurrence. So a short-term bounce is anything but surprising.

But you want to know what concerns me about this storyline? It’s too pat. I continue to see, hear and read a ton of commentary that’s more focused on playing bounces than how to avoid even more brutal losses.

Moreover, where’s the volatility and panic? The VIX index rose to around 27 yesterday, sure. But that’s far below the August peak of more than 53 … the fall 2014 peak of 31 … the 2010 and 2011 mini-panic peaks in the mid-40s … and obviously nowhere near 2008, when the VIX exploded into the 90s.

And while everyone is focused on China, and pointing to how the country restored a bit of temporary calm by stabilizing the value of the offshore yuan, few seem to be focused on the carnage elsewhere.

When everyone’s selling, should you buy?

The South African rand just fell to a record low yesterday. The South Korean won just fell to its lowest in five-and-a-half years overnight. The Russian ruble is dropping like a stone, now less than three percentage points from the panic low set in December 2014.

Copper futures just sank to a fresh six-and-a-half-year low of $1.95-and-change per pound. Crude oil briefly traded below $30 a barrel. Treasury bonds also jumped in price, pushing 30-year yields down by more than seven basis points and flattening the yield curve.

In other words, several peripheral markets are still signaling trouble. True panic selling still seems to be missing from the equation in stocks. And my work suggests too many investors are still trying to pick bottoms rather than stampeding to the sidelines.

“The broader trading patterns I’m seeing aren’t encouraging.”

This is all relatively short-term stuff. I know many of you are focused on the long term — on strategies such as building wealth through the use of stable, income-generating stocks. To that end, I still have a handful of higher-yielding, lower-volatility recommendations in services like my Safe Money Report.

But the broader trading patterns I’m seeing aren’t encouraging. Sharp short-term oversold rallies following waterfall declines are bear market-style moves, not bull market ones. Violations of major support for many stocks, followed by extremely narrow, short-term rallies driven by just a handful of momentum names, are too.

Bottom line: Unless and until the broader bear market patterns begin to change, I plan to continue maintaining a higher-than-usual amount of cash. I will also take some “short” profits into waterfall declines … lighten up into rallies and/or add new short positions … and otherwise pursue strategies that perform best when it’s tough sledding out there.

Does that sound like a solid approach to you? Are you doing something different? Anything else you’d like to add? Then hit up the comment section and let me hear about it.

Our Readers Speak

Oil, stocks and strategies for this incredibly volatile market — those were among the topics being discussed at the website recently.

Reader GB shared this take on the latest oil sector calls by the major Wall Street firms: “The banks’ positions are likely to help them make money. They are not interested in helping the everyday investor.

“So jumping on the $20 oil wagon is likely an attempt to manipulate opinion (and positions) more than what they actually believe. I hope I’m right. But I think oil is near or at a bottom now, and we’re just a click away from it going up again.”

Reader J. weighed in on the current market backdrop, saying: “You can compare past times to today if all is equal. But I think the economic problems are much more out of control than prior. Possibly this crash will be worst than last. But only time will tell.”

Reader Denis offered this advice about how to cope with today’s environment: “I say keep your powder dry, and stay in cash or very liquid.”

Reader David backed that call up, saying: “I agree. I am 85% in cash, but am selling deep in the money puts to try for some income.”

On the other hand, Reader Howard said: “At some point, we must stick our toe in the water again. Cash will not make you rich without risk. At what point do we jump back in? I’ve started already. Good luck.”

Reader $1,000 Gold also said he’s putting some money to work: “I started buying back in at the 1,881 S&P level on September 28. My thinking is: No recession in sight, no crash in sight, and the market always eventually returns. As hard as it is for me to do, I like buying stocks when they’re on sale.”

There are lots of viewpoints, and lots of ways to play these markets, and I thank you for submitting them. If I didn’t get to your comments, or you have others you’d like to add, be sure to use the Money and Markets website as your resource.

Other Developments of the Day

Crude oil prices came dangerously close to trading with a “two handle” in the early going today, before rebounding somewhat. One firm called Wolfe Research warned that as many as a third of U.S. energy producers could face bankruptcy or forced restructuring in the next year and a half, according to TheWall Street Journal. A separate report pegs losses for North American producers at roughly $2 billion a week given current pricing.

An apparent suicide bomber struck in central Istanbul, killing at least 10 people and wounding more than a dozen others. The explosion targeted a popular area for tourists with a number of heavily visited monuments.

The craziness continues in Hong Kong as China seeks to snuff out speculation in the offshore currency market. By restricting liquidity to Hong Kong, officials drove the overnight borrowing rate there to a ridiculous 66.8% — all with the goal of driving convergence between the offshore currency rate and the onshore “official” rate.

Unfortunately, “solving” one problem creates another one — a massive liquidity squeeze for legitimate banking endeavors in Hong Kong. It’ll be interesting to see how this sorts out in the coming days.

The University of Alabama beat Clemson University 45-40 last night, winning its fourth national championship in the last seven years. The key moment came when coach Nick Saban called an onside kick at a surprising moment, putting his team in a position to take a fourth-quarter lead.

What do you think about the $2 billion-per-week in red ink that oil and gas producers are racking up — is there anything that can stop the bleeding? How about China’s latest effort to stem currency speculation — are officials fighting a losing battle against markets, or will they succeed? Is Turkey facing more instability and terrorism going forward? Share your thoughts in the comment section below.

Best wishes,

Mike Larson

Recommended Articles by Mike Larson:

Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.

{128 comments }

HowardTuesday, January 12, 2016 at 4:34 pm

Finding the bottom is never easy. When you have had historically low prices in commodities at some point the smart money will re enter the market. This market has been in decline for some time and each of us will decide when the time is right. Don’t wait to long.

LarryTuesday, January 12, 2016 at 4:46 pm

You can make money when stock go up and you can make money when stocks go down. The climate, however, has changed over the past year. We previously bought on dips; now we better sell/sell short/buy inverse etf’s when general market bounces up into a technical resistance. Just made 10% on my portfolio with bearish trades; and I plan to do it again after this expected bounce. It is not rocket science; you just can’t do bullish trades in bearish markets without losing money.

Craig BradleyTuesday, January 12, 2016 at 4:56 pm

10 YEAR’S AFTER

Amen. Most investors are yet to catch-up with you Larry on what kind of market we have today. (Everyone has to deal with today’s market, not last year’s). The public has a slow learning curve; real slow ( 10 years behind). Ditto with the Federal goverment, its regulators, and many politicians, as well.

Alternative energy was all the rage back in the late 1970’s under Democratic President Jimmy Carter. Oil Shale projects in Parachute, Colorado ( near Rifle, Colorado) were THE local economy in the whole region, providing high-paying jobs for a time. The Synfuels Corporation was subsidizing Exxon, a major player in the Oil Shale Game. The Game ended after President Ronald Reagan discontinued the Synfuels Corp. and Oil Spot Price crashed. Game over.

All the contract construction workers in the region were terminated by a unannounced lock-out in May, 1983. Brown & Root, a major contractor and employer with Exxon laid-off most local employees and Morrison-Knudsen consulting engineers did likewise. Immediate deflation set in this “one-horse” town, as the whole economy went from Boom to Bust, as is the history of Colorado.
“For Sale” signs sprouted in many front lawns like so many dandelions that Spring, I recall.

Furthermore, the area went into a “prolonged recession” (10 years +) according to Dean Witter Reynolds in nearby Glenwood Springs, Colorado, who closed down their local office. No economic recovery for almost 10 years. Once again, locals had some “peace and quiet”, as well as a much lower cost of living (rent). So, you might expect the current oil depression to stick around a bit longer than just a couple years, particularly down in Houston, Texas.

“Come to the party”, Mike Larson”

H. Craig Bradley

davidTuesday, January 12, 2016 at 5:28 pm

Suadi lowered their price to 27.50. Petrobras shelfed its deep water and made cuts of $32 billion.
Make all put you want. If oil goes positive we are going to see a the big squeeze in commodities and equities.

Richard SalyerSaturday, January 16, 2016 at 10:39 am

Thanks David;

I like this. I’m into a Natural Gas ETF leveraged and Silver, but I hadn’t figured on a massive Short Squeeze coming. It should be spectacular, yes?

tonyTuesday, January 12, 2016 at 5:30 pm

$1000GOLD. has all the answers—boy.

$1,000 goldTuesday, January 12, 2016 at 7:24 pm

it’s about making money, not about being right. i just try and be less stupid today than i was yesterday.

$1,000 goldTuesday, January 12, 2016 at 7:26 pm

looks to me like we’re about at the bottom of the bear trap, which is usually the last good buying opportunity before the bull resumes. but don’t listen to me, because i’m a far cry from always being right.

$1,000 goldTuesday, January 12, 2016 at 7:30 pm

if you go back to the september 28 blogs, you’ll see that i flat out said i was a buyer and invited anyone and everyone to join me. i have a ton of money invested right now. i hope i’m right.

$1,000 goldTuesday, January 12, 2016 at 7:33 pm

i don’t have all the answers, but i do have a zillion questions. as much as i’ve learned in the short time i’ve been doing this, i still haven’t anywhere near reached my potential. a lot more to learn.

$1,000 goldWednesday, January 13, 2016 at 12:15 am

i’m an idiot. come jion me

$1,000 goldWednesday, January 13, 2016 at 1:08 am

ya, ya, ya $1000 gold with a comma. i’m an idiot. a bigger idiot than you’ll ever know. you really think i care?

Richard SalyerSaturday, January 16, 2016 at 10:40 am

A future Warren Buffet in the making?

Craig BradleyThursday, January 14, 2016 at 11:58 am

TONY- Baloney

carmeloTuesday, January 12, 2016 at 5:36 pm

It – the market – is seriousily drugged, reason for wich needs to be
Disintossicate.

Lee FisherTuesday, January 12, 2016 at 5:38 pm

The transparent elephant is our debt – not the advertised $19 trillion, but the off-book debt of $125 trillion (Congressional Budget Office). My guess is that politicians will continue to conceal the off-book debt until after Obama is removed. Then . . . . . ? Stay tuned.

PhilWednesday, January 13, 2016 at 4:21 am

Don’t take the “off the books” debt too seriously, as it includes imputed debt. Let me personalize it for you. I have a $50,000 mortgage and $10,000 auto loan, so my debt is $60,000. But I have 2 children to put through college and medical school, and this will cost at least $800,000 each, so my “off the books” debt is $1,660,000, which is about 28 times my actual debt. So I’m broke with no hope–unless, of course, I consider only real debt, which I manage with ease.

Craig BradleyThursday, January 14, 2016 at 12:02 pm

UNDER-THE-HOOD

“Off-the-Books” income does not count. Off-the-Books debits do not count because, they are not reported. They become important when stock investors suddenly become more risk averse, critical, and begin to actually look “under the hood” for once. Such investor concerns indicate growing negative investor sentiment, a possible precursor to a (lengthy) bear market.

Joseph GTuesday, January 12, 2016 at 6:06 pm

Now that all of the places that you can store oil are full where do you put it all the oil tankers are full to so without anywhere for it to be stored and consumption slowing down due to the slowing world economy I think the real bottom is not far off 25 or so!!

Bret SmithTuesday, January 12, 2016 at 6:08 pm

Hey Mike,
So when are interest rates going to explode higher like you and Martin have been talking about since 2007 ? Care to issue (yet) another interest rate forecast ?

KarlTuesday, January 12, 2016 at 8:59 pm

Since predicting increases at least since 2014, the Fed proved him right with its mighty jump of 0.25%.

Timi JTuesday, January 12, 2016 at 6:09 pm

I agree that we are in a BEAR market; which, the pundits(CNBC) will not SAY. Another view for me is the volume of buying (UP) days and Sellling(DOWN) days.

I did NOT appreciate Lee’s comment that OBAMA be removed from office. First, he is President OBAMA; like it or NOT. He was overwhemenly voted for TWICE by all AMERICANS. Stop the insult to the highest office of this great land by calling the President by his 1st name. His 2nd term will end in January 2017 and it will be viewed by future generations as a successful president despite the massive and most hateful obstruction/s in US history. This hatred need to STOP. Until that happens, we are just wasting time and wishing. That is INSANITY !

CharlieTuesday, January 12, 2016 at 6:33 pm

Timi, I wonder if you were equally offended when W was called names not even fit for an animal! Calling a president by his/her name is not an insult lest we start calling everyone sir/madame/mr/miss/mrs ….

booksTuesday, January 12, 2016 at 6:49 pm

Amen to that,
Timi J

FredTuesday, January 12, 2016 at 7:11 pm

Hey Tim, I don’t appreciate your comment about Lee. Obama may be the President (unfortunately) for most of us, unless you are one of the leaches getting government freebies.

Timi JTuesday, January 12, 2016 at 9:45 pm

The leeches like YOU have been around way before President Obama was twice elected to the Oval office. It is NOT unfortunate he is president. Majority of the 320 million Americans TWICE voted for HIM. He is fortunately OUR (Americas) president.

If I am part of this financial forum with the Weiss Research Group; you must know that I am highly educated, knowgeable and very aware and armed with “resources” you cannot imagine. To refer to me or anyone you know nothing about a “leech” on the govt. is ignorant That is of a SICK mindset that anyone is a leech on the system.

It is time for people to reason without being offensive to the other side. I hope you know you are WRONG and took the WRONG side this time.

RichardTuesday, January 12, 2016 at 7:15 pm

No Tim,Where the POTUS has brought us is insanity.

Chuck BurtonTuesday, January 12, 2016 at 7:32 pm

No one thinks it is insulting to the Roosevelts if you call them Teddy or FDR, or Lincoln if you say Abe, or Reagan if you use Ronny. Why should B.O. be any different?

muleTuesday, January 12, 2016 at 8:53 pm

Timi J, what you call hatred is nothing more than disgust. Respect has to be earned.

Mule

Eagle495Tuesday, January 12, 2016 at 8:58 pm

Thank you Timi J for speaking the truth…..

JUDY HOYTWednesday, January 13, 2016 at 5:04 pm

FIRST OF ALL YOU SAID THAT OBAMA WAS REELECTED BY ALL AMERICANS, YOUR WORDS! NOT TRUE! ENUF SAID

hawk5000Wednesday, January 13, 2016 at 10:29 pm

the problem with Obama he was put in his senators job by ted kennedy immediately he started running for president he had no special skills in fact he had no on the job skills just his job as a community organizer ….. many acts of election fraud were commited to keep obammy as president in some counties over 102.5 % voted for him so fraud was very evident there and there was over 100 counties that voted 100% for him when they knew that only 70% of the voting pop. voted at all

Craig BradleyThursday, January 14, 2016 at 12:07 pm

AMERICA HATES LIGHTWEIGHTS

We dislike people who lie with impunity and get away with it, no matter who they are. Most Americans are not so chipper anymore on account of a bear market, lackluster economy, flat household income, and rising fixed costs of necessities. What do you expect Timi J ??

More to the point, everyone all over the world in most key regions is trying their darnest to start a regional war. So, we can look forward to more hate in the form of World War III. Its one thing to be hyper critical of your opposites, its quite another to kill them by the thousands. By matter of degree, you view of hate is lightweight.

JimTuesday, January 12, 2016 at 6:36 pm

Mr. President Obama does indeed have an impressive string of accomplishments. He balanced the budget, and paid down our debt. He gave us the best economic recovery in history. He closed Gitmo. He reduced the poverty rate and the number of food stamp recipients. He improved race relations. His foreign policy success in Irag, Syria, Egypt, Libya, Afghanistan, and Crimea are second to none. He Improved relations with our top ally, Israel. He stopped the violence and gave us common sense gun laws. He upgraded the Military. He saved our ambassador in Benghazi. He gave us The Arab Spring. He solved the healthcare crisis and lowered everyone’s premiums, and we got to keep our doctor. What’s not to like? Jim

JosephusTuesday, January 12, 2016 at 7:05 pm

@Jim. nice try! GOT IT! I read all you wrote in opposite and it really made sense.

RichardTuesday, January 12, 2016 at 7:12 pm

Excellent analysis JIm. Good job.

PatTuesday, January 12, 2016 at 7:20 pm

Amen .. Sounds Good to Me.. If I watch Main street media !

Hello !! .. How do we communicate to main street people who have no clue!

When we figure that out.. we can find a way to make America a free market Capitalistic country again. Pat

JimTuesday, January 12, 2016 at 8:12 pm

I thought it would be a low blow to discuss Iran. Jim

muleTuesday, January 12, 2016 at 8:55 pm

Good Stuff Jim……ROFLMAO!!

Mule

GordonTuesday, January 12, 2016 at 11:32 pm

He is a winner by far if you stack him up against George Bush. How soon we forget and we must always find someone to carry the can. You reap what you sow.

PaulWednesday, January 13, 2016 at 7:18 am

What Rock are you living under?

JUDY HOYTWednesday, January 13, 2016 at 5:08 pm

WHAT? HE SAVED OUR AMBASSADOR IN BENGHAZI? HE AND 3 OTHERS WERE MURDERED! DO YOU NOT KNOW THIS?

Ed ShireSaturday, January 16, 2016 at 4:37 pm

He was being sarcastic.

ScottTuesday, January 12, 2016 at 6:38 pm

The market has been in a monthly bear sell mode since April 2015. The downside is just getting started. Since April-May, the strategy has been to get out of longs and sell rallies. Has been working gangbusters for me. Income is no good if your underlying asset declines 20, 30, 50% or more – look at oil. Better to be sitting totally in cash, waiting for the long term trend to change back up. Could be quite a while – 1-2 years at least, maybe more. Look how long gold has been in a downtrend – over 4 years now. Same could happen in stocks. Anyone still long in this market without close stops is in for a world of hurt down the road. The pain’s just getting started.

RichardTuesday, January 12, 2016 at 7:10 pm

There is no way that anyone can convince me that RBS is not correct.
The world cannot pay the debts we have built. It’s time for cleansing and it won’t be pretty.

GordonTuesday, January 12, 2016 at 11:34 pm

When governments does away with cash and give us electronic money it will only be numbers no plus or minuses.

PeterTuesday, January 12, 2016 at 7:11 pm

The price of oil isn’t going to rebound for quite some time. Saudi Arabia is engaged in a policy of “pump a lot and sell it cheap” in order to drive the economy of Russia, which supports Saudi enemies Iran and Syria, into the ground. And their plan is working. The Saudis also want to drive the fracking/tar sands companies into bankruptcy. And that plan is also working. After they achieve their goals, they’ll reduce production and oil prices will rise.

JimTuesday, January 12, 2016 at 8:08 pm

Historically, commodities have more or less followed a fifteen year cycle. This down cycle probably has a ways to go. We could easily dip to $20. My guess would be a gradual rise into the $40 area where it will reman for a good while. The Saudis will accomplish their political goals and discourage alternatives, and conventional US producers with realistic balance sheets can survive at that level. Unexpected geopolitical events could change this. Jim

$1,000 goldTuesday, January 12, 2016 at 9:09 pm

if oil goes to $20 bucks, i would expect to see many unhappy campers in oil countries.

JimTuesday, January 12, 2016 at 9:30 pm

It’s also the only time you can purchase good production for a reasonable price. Jim

JimTuesday, January 12, 2016 at 9:44 pm

A lot of these campers are doctors, dentists, lawyers, and investment bankers that had no business being in the oil business In the first place. As usual they spoil the game for the proffesionals and line the pockets of the unscrupulous promoters. Jim.

GaetonTuesday, January 12, 2016 at 10:43 pm

$1000
You are right. The Sauds may make money at $20 dollar oil but their fiscal budget requires $50. They are bleeding cash as is every other mid eastern country and Russia. Oil has bottomed. Every talking head on CNBC is calling for $20 oil. I am buying calls.

$1,000 goldTuesday, January 12, 2016 at 10:30 pm

i wonder if the saudi’s plan is working. the fact that they’re considering and ipo for aramco sounds like an act of desperation to me. i doubt the saudi’s have a plan, it’s more like they don’t have a choice – damned if the do, damned if they don’t.

JimTuesday, January 12, 2016 at 10:40 pm

I’m told their leadership is in disarray at present. The new King doesn’t have all his marbles and is not popular. Their plan is working but I have to wonder if they really want it to. The Aramco IPO does smack of desperation doesn’t it? Jim

$1,000 goldTuesday, January 12, 2016 at 10:45 pm

look at it like this. if the saudi’s back off on production, america will pick up the slack. so they really don’t have that option. basically, the saudi’s have to pump full tilt until the bottom is in. it’s not a choice on their part. and it’s really the way markets work.

$1,000 goldTuesday, January 12, 2016 at 10:54 pm

…mr market wins in the end.

GaetonTuesday, January 12, 2016 at 10:52 pm

Their plan isn’t working because they are a one trick pony. Without oil income they have nothing. We will feel pain in the oil patch but the economic diversity of the US will prevail.

$1,000 goldTuesday, January 12, 2016 at 10:58 pm

i like your idea of buying calls. i’m going to have to try my hand at options sometime. the saudi’s aren’t pumping full tilt because they want to. they can’t let up or they not only lose desperately needed revenues, they also lose market share. this goes for every oil producing country in the world.

$1,000 goldTuesday, January 12, 2016 at 10:59 pm

this is the way markets are suppose to work.

GaetonTuesday, January 12, 2016 at 10:59 pm

I believe the bottom is in for oil. The monthly 20 yr chart for oil is showing an upward bias in the MACD and the Coppock curve is trending up from deeply negative territory. Oil will be volatile but probably will stay above $30.

$1,000 goldTuesday, January 12, 2016 at 11:10 pm

i’m not good at timing the market or picking bottoms. it’s already going lower than i thought, which was $30, and now it looks like $20-something is going to happen.

JimTuesday, January 12, 2016 at 11:56 pm

Timing is the hard part, but there is no doubt owning the right oil stocks is going to be a very profitable move. Is there any surer long term investment than one as cyclical as oil, or even better, oil service. I will buy the kingpin, Schlumberger, when I think the time is right. You can bet they are making all the right moves to come out of this slump as the dominant player. Jim

GordonTuesday, January 12, 2016 at 11:37 pm

Who does have a plan? The Fed? They give new meaning of the old statement “flying by the seat of their pants”

JimTuesday, January 12, 2016 at 11:47 pm

Or driving blindfolded! Jim

$1,000 goldWednesday, January 13, 2016 at 12:53 am

i’ll remember shlum-brew-zshay. good tip.

The US or RussiaTuesday, January 12, 2016 at 7:21 pm

My second attempt at trying to solve the oil problem; I guess the first attempt fizzled, but never to give up and go home. Let’s assume that our great friend Russia is in cahoots with the Saudis by encouraging OPEC to maintain their low oil price to drive the US economy or at least part of it into the ground. Although, this strategy seems like a futile and self-inflicting wound to those two oil producers which will eventually cost their economies in the long run, what does the US have to lose? Well, let the US start to slowly remove its cloak of security around Saudi Arabia and see how that would affect the price of oil. Let the Saudis turn to Russia for security and Presto! the Mideast terroristic problems now belong to – Russia. Russia already supports Syria and probably other regimes here and there so let’s have them waste their rubles on a bottomless sinkhole!
Of course, the preceding is a bunch of nonsense just like everything else, but what if that was all it took to stabilize the price of oil. Can you imagine buying oil in worthless rubles worldwide – the petro ruble. Russia – be careful what you wish for!

andrewTuesday, January 12, 2016 at 7:36 pm

The Saudi’s objective is to flood the market with cheap oil so as to drive the frackers out of business
They can still make money at 10 dollars a barrel, and they have done it before. along with frackers , the lending banks will go down as well, Chinese consumption of oil is down and will get worse, world economy is slowing, so 20 dollar oil is most likely around the corner

barryTuesday, January 12, 2016 at 10:44 pm

Andrew — you clearly know little about govt accounting — particularly Saudi govt accounting.
True they can dig up the oil for less that $10 which suggests to people like you that the rest is profit. However they are committed to unsustainable social programs to their indolent populace to a degree where they need oil at a minimum of $90 just to break even. Now that oil is way below that they are running through their reserves at an alarming rate. They will be totally broke at this rate by 2019 at the latest

JimTuesday, January 12, 2016 at 11:25 pm

Your math is correct. Perhaps this is why the Aramco IPO is being considered. It could be worth trillions, but then they wouldn’t own their oil anymore. Would you trust the Saudi Royal Family with your money? Ask Exxon what you get being partners with the Saudis. NADA. Jim

$1,000 goldWednesday, January 13, 2016 at 1:06 am

i don’t the saudis are trying to drive anyone out of business. instead, i think they’re desperately trying to pay the bills. with cheap oil, all the oil producing countries are in a desperate situation where they have to pump full tilt just to pay the bills. here’s the good part. now watch what happens in these countries as unhappy campers revolt. countries like iran, venesualia, nigeria, russia, etc. world war 3 may be won without america ever firing a shot as the countries implode. forget the 1.3 billion dollar lottery. anyone born in america already won the ovarian lottery.

JimWednesday, January 13, 2016 at 1:43 am

The other danger in their strategy is that every well has a declining production curve. The harder you pump them the quicker they deplete. Combine that with decreased exploration and development and you have a formula for future price shocks on short notice. The World’s fields deplete at about four per cent a year. That’s about three and a half million bpd that have to be replaced every year just stay even. Any bet on future oil prices is a risky proposition. Jim

$1,000 goldWednesday, January 13, 2016 at 2:05 am

all this cheap oil will be hugely bullish for america. the party is over for texas, but the rest of this country is going to love cheap oil.

JimWednesday, January 13, 2016 at 2:35 am

You clearly see the supply side of the equation, but If demand is weakening it’s indicative of a worldwide economic slowdown that’s bad for everybody. A lot of people are starting to recognize the fact that low commodity prices, across the board, could be indicative of trouble ahead. You can also expect the government to take up the slack with new gas taxes. Jim

$1,000 goldWednesday, January 13, 2016 at 9:11 am

we’re near a bottom in oil. that will stop the rout in commodities. we won’t see $100/bbl oil again in a long, long, long time. during that long, long, long time the american economy is going to do great.

GordonTuesday, January 12, 2016 at 7:47 pm

Our good friends the Saudi’s declared economic war on the US oil industry and totally crushed it in 30 days, same with the Russian oil industry. Now the Communist Chinese “stock market” hiccups and the American economy is in a death spiral.
Our corrupt politicians keep selling us down the river, to Communists and those who finance terrorism. And yet “We the Sheeple” stand idly by and fret and worry, watching our hard earned money go down the sewer.
It will get worse before it gets better. But better it will get. Jump in when you see your price. Be smart, not defeated.

I agree about the no panic selling, stocks will continue to drop and several small to medium size oil companies will file for bankruptcy. These are interesting times and if you play your cards right, you will make lots of money.

DaveCTuesday, January 12, 2016 at 9:08 pm

Mike, I completely agree with your caution; however, I’ve been 100% in cash since summer – the immediate future is extremely dangerous. (Check out the status of the Baltic Dry Index.)

GordonTuesday, January 12, 2016 at 11:41 pm

Now here is a boy doing his homework yes check the Baltic Dry Index. Look around the world. Taiwan is now into the stock market buying much like China. These are signs of trouble. Governments want you to make money on the way up and will shore things up when it falls. Its a suckers game.

GordonTuesday, January 12, 2016 at 11:44 pm

Also Wall street has got gold ham strung. It allows it to climb up about $30 an ounce and then shorts the hell out of it. They are happy with a 1000 to 1100 range and that is it. With the Comex paper gold its easy to keep in check. Wall street and governments hate gold. Gold seems to tell the truth to liars.

KarlTuesday, January 12, 2016 at 9:15 pm

Preserving cheap fuel prices for personal use: Does anyone know how to lock in gasoline, diesel, etc. prices for a longer term, e.g., one year or more? This can already be done with natural gas purchases for fixed price, by getting a one year or longer contract with a supplier. It would be fine to do something similar for auto fuel as well — get fixed price contract, or pre-pay for 1,000 or 2,000 gallons, then pump when needed..
The only thing that comes to mind is the futures market, but who can buy 10,000 (or 25,000?) gallons and pay to store them?

Timi JTuesday, January 12, 2016 at 9:32 pm

This message is for you: Charlie-Lee Fisher-Fred-Mule…..Your statement from the start has an agenda and will be corrected. You really are ignorant and blinded by your hatred. YES…You are to call the President by the title of his office. I said it and still stand by it. It is call respect.
Secondly, you cannot use this financial forum to foster or promote your hateful agenda that OUR president we voted for and place in HIGHEST office BE removed. You are WRONG today and everyday if that is how you think.

Listen to the State of the Union address and will hear his list of accomplishments if the Detractors and Obstructors get OUT of the WAY; so more Americans can begin or continue the climb to the true iDEALS that is AMERICA.

FACTS are FACTS.

muleTuesday, January 12, 2016 at 9:55 pm

Timi J, you and obammy don’t rate hate, contempt is the best you can do. You come on here running your mouth and lecturing people you can expect to get what you got.

Mule

151Tuesday, January 12, 2016 at 9:56 pm

I suggest you list for us his accomplishments. I will help you start:

1. $19 Trillion Debt….up from $10 Trillion when he took office
2. 14 million more Food Stamp recipients
3. 94 million out of work.

zbig niewTuesday, January 12, 2016 at 10:37 pm

America needs Trump to negotiate bankruptcy terms with russia china et al and to tell the waves if immigrants that the america inc. store is closed. Trump is the prince who is feared more than loved even an american putin. Despite being hated by the so called establishment he was probably selected by the elite to be the new FDR.

JimTuesday, January 12, 2016 at 10:54 pm

We do not hate Obama or the Liberals. We just don’t like what’s happening in the Country at present and its your watch. We are tired of the constant stream of excuses we hear daily. Every failure is someone else’s fault. The O has never taken responsibility for anything that has gone wrong. You guys have had seven years to fix all the things you complain about and haven’t really done it. Race relations, income inequality, civility, etc have all gotten worse, not better. Give us a little credit as well. Jim

Ed ShireSaturday, January 16, 2016 at 5:12 pm

Early in Obama’s presidency, Mitch McConnell the senate majority leader said that
he and his Republican colleagues would do all they could do to block this president and make him a failure. In spite of this, the country overwhelmingly reelected him. He has not sent vast armies overseas to die in futile wars. In 2008 many were predicting a depression. That did not happen. The U.S. currently has one of the few reasonably functioning economies in the world. He got health insurance for seventeen million Americans who didn’t have it. He has moved strongly to protect our environment, the world in which your children and grand children will have to live. So that people in New York won’t have to go around wearing face masks as they do in Beijing.
I believe that it was 1984. The winter Olympics were happening. An American girl won a gold medal in a ski competition. A call came in from Reagan to congratulate her. She answered phone. “Hi Ronnie”. I was offended. Though I thought Reagan to be a terrible president I felt her informality was totally out of place. It was clear that this girl was not a Reagan fan, but she should have shown respect for the office he held.

Eagle495Wednesday, January 13, 2016 at 11:33 am

Idiot GOP paid commentors?

hawk5000Wednesday, January 13, 2016 at 10:50 pm

your the idiot democrat commentor eagle 495 or should I just say mike s. I noticed you and timi j seem an awful lot alike in you mannerisms and speech

JUDY HOYTWednesday, January 13, 2016 at 5:14 pm

RIGHT ON.

TiredSaturday, January 16, 2016 at 8:58 am

Don’t the massive invasion of the country under way now-with pre approved benefits.

zbig niewTuesday, January 12, 2016 at 10:50 pm

Libtard. Prez is not an FDR or JFK liberal. He is a typical neoliberal not too different from a neocon. Hillary is his libtard Mccain. The older whiter voters will come out in droves for Trump.
Hillary just ain’t the rock star that Prez is and the young and dumb wont bother to vote for her. Not even with Sanders on the ticket. The only issue is Trump’s health in 2016, capiche?

MikTuesday, January 12, 2016 at 11:13 pm

The market has been on a tear essentially since Obama was elected and is moving down
with the bears now that he is leaving. Perhaps the market I’d giving him a positive vote

JimTuesday, January 12, 2016 at 11:43 pm

The Market tear also coincides with the Fed showering the Financial Institutions with essentially free money which they poured into the stock market. Perhaps their taking away the punch bowl has something to do with the party being over. Jim

muleWednesday, January 13, 2016 at 9:16 am

Here’s some facts for ya Tiny Timi J, from Ed Rollins:
“The office of the presidency has been diminished under Barack Obama’s two terms. His party has been demolished at the State house level and in the loss of both Houses of Congress. But he still panders on.

This is not an historic presidency and he exemplified his “leading from behind” with a very forgettable farewell State of the Union.”

Mule

Ed ShireSunday, January 17, 2016 at 5:26 pm

Those are not facts. Those are the opinions of a long time Republican hack.

hawk5000Wednesday, January 13, 2016 at 9:51 pm

yea Obummer is a pretty good liar I gotta hand that to him

hawk5000Wednesday, January 13, 2016 at 10:45 pm

just what are your true ideals that is America FOR YOU _______ is it your free obammy phone or your free obammy medical ,dental, optical, prescription drug or is it your free obammy food stamps free obammy housing free obummer babysitting or maybe its the free barack insane Obama energy assistance or free………………………………………

151Tuesday, January 12, 2016 at 10:08 pm

I think all would wish Mr. Obama a nice time managing the cats at the U.N. as he has now of course expressed interest in such. THAT is more suited for his proclivities anyway.

More important stuff…….

Looks like a nice countertrend rally underway but doubt it will last long. I am looking for another little bounce tomorrow and then……a fall to the 1800 area on the SP500.

zbig niewTuesday, January 12, 2016 at 10:27 pm

Thorsday is often the day to hammer wounded markets as is the moonday after a bad week.
Dow could be in a 16000 to 17000 short squeeze over a day or two or a week or two. Sell more.

$1,000 goldTuesday, January 12, 2016 at 10:40 pm

you’re probably right, 151. every time i buy into the market, it goes down. it’s like a curse. if it weren’t for buy & hold, i’d never make any money.

Gordon CWednesday, January 13, 2016 at 12:01 am

Don’t feel like the Lone Ranger. Me too!

JimWednesday, January 13, 2016 at 12:17 am

I bought FCX at $7. Definitely feel like an idiot, but I think I have to stick. Like you say. If you don’t hold you only lose. Jim

$1,000 goldWednesday, January 13, 2016 at 12:17 am

too bad i bullied all the people away that used to comment and know what they were talking about

JimWednesday, January 13, 2016 at 12:39 am

Courage, my friend. Remember Ben Jonson used to say that humility is the most contemptible form of conceit. You have as much chance of being right as anybody. I have rarely made money on the gloom and doom end. Surely as we post, if we went short tomorrow the market would soar. Jim

JimWednesday, January 13, 2016 at 12:52 am

He also said talking is a disease of age! Jim

Ed ShireSunday, January 17, 2016 at 5:22 pm

That was probably Samuel Johnson who was more given to that type of wisdom. Ben wrote plays and poems. “Drink to me with thine eyes….

$1,000 goldWednesday, January 13, 2016 at 1:14 am

are you back again, troll? you really got it out for me using my i.d. go ahead. doesn’t matter to me at all. you sully my good name all you want.

$1,000 goldWednesday, January 13, 2016 at 1:17 am

you must be talking about heide, bfd, were, etc. they’re all still here. they just changed their names like you just did by calling yourself $1000 gold. have at it, bubba. i couldn’t care less.

$1,000 goldWednesday, January 13, 2016 at 1:18 am

you’re the bully. i just defended myself. just like you’re the bully now.

$1,000 goldWednesday, January 13, 2016 at 2:09 am

they are all the same person, troll. they’re welcome back.

HawkeyeTuesday, January 12, 2016 at 10:14 pm

Timi J
Post only financial information then and quit going on about our “greatest” president ever! Geez!

hawk5000Wednesday, January 13, 2016 at 10:56 pm

I wonder when Obama will be selling his record…… barack Hussein Obama greatest hits against America

zbig niewTuesday, January 12, 2016 at 10:19 pm

RBS and CNBC and JPM and mainstream media gave up in the week since Jan 4 2016.
The market is overdue for a short covering rally. Dow will probablt hold 16000 not test 15750. WTI crude will hold 30 for a bit too.

THE FED IS OUT OF AMMO. Eurobank etc.
cannot lower rates or monetize debt any more.

Yes Mike, I agree with you. Sounds to me as if RBS is pretty much out of the market, but B of A still has a lot of stocks to unload.

GordonTuesday, January 12, 2016 at 11:50 pm

From the posters here it looks like B of A has lots of eager customers waiting. Step up boys and buy. After the big boys unload you will be left holding the bag. Its just history repeating itself.

WyattWednesday, January 13, 2016 at 12:13 am

Your absolutely correct.

WyattWednesday, January 13, 2016 at 12:07 am

The hand writing is on the wall with regard to the global economic future. China is and will continue to “crash” this year. This is because there is no demand for products, we brought everything we needed in 2000 – 2008. Furthermore their work force is reaching retirement so there no one to work the oroduction lines. Accordingly, China’s factories are shutting down on a daily basis, which in turn is the causation (in part at least) to the “melt down” of the Asian markets. Debt to GDP’s and governmental interventions surely didn’t and won’t help.

These economic ills will travel to both the U.S. and Europe (Dow falls to 8000 – 6000 and Europe will crash too, both primarily due to QE’s and no recovery from the previous expansion of 2000 – 2008. Moreover, both countries debt to GDP is the missle that sinks the boats.

Lately, demographics will play a major role in this deflationary cycle, as the worlds baby boomers are saving for retirement and the post baby boomers 25+ are deeply indebted with student loans, 30 hour work weeks, sky high rents and little innovation to create a new industry of gainful employment.

In 2020 – 2029 the global economy will begin to rebound – if there is a reduction in population growth .

Put your money under the mattress and wait for the storm to pass!

terry sheadWednesday, January 13, 2016 at 6:00 am

Mike at last a bank is telling some truth?

Dave WWednesday, January 13, 2016 at 9:44 am

Ran into an old boss a few days ago. In 2007/08 he was a bull on Blackberry. His father always used to say, yeah the stock is going up, but what kind of dividend does it pay?
The son got seriously burned on Blackberry, but his father made a killing buying more BNS,
ENB, and other dividend aristocrats. I learned from the father. I have been in cash since May 2015. I have 10% in gold maple leafs, and 10% in silver maple leaves. The yeilds on my favourited dividend stocks on looking pretty good, and I am just waiting until I see signs of prices stabilizing before I get back in, and lock in yeilds of 10% or more.

NickThursday, January 14, 2016 at 6:50 am

Which Stocks can give a 10% or more yield that is safe and secure , this i have to see please tell me ….

NickThursday, January 14, 2016 at 6:45 am

The system is structurally broken , huge debt levels across most of the worlds largest economies and in the case of the USA so high they can never be repaid , this is causing abnormally low interest rates that in turn have caused real estate and stock markets to hyper inflate to unsustainable and choking levels , there are far too many unproductive people on welfare necessitating in very high incentive killing tax rates in order to pay them and everything else that there sense of self entitlements demands , there are also inefficiencies , waste , corruption built into every level of Government and institutions , and not to mention the unsettling effects from the rise of Islam, .
The whole system has been wobbling along on band aid measures that manifest as progress but in fact increase indebtedness and bring the whole system closer to total collapse which is the only inevitable conclusion that can be drawn from all the facts .The only way out that i can see is a Global meeting of world leaders that results in the forgiveness and cancelling out of all debt effectively resetting and restarting the system over again only this time on sound old fashioned economic principles including a Gold Standard …

Ed ShireSaturday, January 16, 2016 at 5:24 pm

You’ve got to stop thinking of those trillions of dollars as debt when in truth it is the trillions that are needed to keep economies liquid and functioning. Where would we find the trillions of dollars worth of gold and silver to replace it?

H. Craig BradleyThursday, January 14, 2016 at 12:35 pm

Most of the political comments on THIS blog and others elsewhere are from Muppets or “Useful Idiots” of the left, or just very uninformed partisans. Real bore too. Go take a hike.

Ralph ProodianSaturday, January 16, 2016 at 6:28 pm

Economics do not control stock action. Pressures of buying and selling do. So, I watch daily bar charts that show 2 years of action. And what do I see? Declining tops, and declining 50, 150, and 200 day moving averages. And what are they Telling me? That the decline will continue. What else do I need to know?

DaveSunday, January 17, 2016 at 2:40 pm

How do I determine the true value of a company? (Not the share price)

LeeMonday, January 18, 2016 at 5:23 pm

Just when it seemed Mike Larson had learned a lesson from urging us readers to buy oil-companies (while oil was approx $100 barrel) he does it again..Last week urging us to buy with the price at $30. The most ridiculous-thing being that Iran was about to join the over-supply glut. Mr Larson is deternined to drain your funds..Let him lose his own money (as it continues to cascade down towards $20) and for goodness-sake don’t pay this ‘Wrong Trick Pony’ for his idiotic advice. There will come a time to buy, but Mr Larson has been dangerously wrong since middle of 2014. If you’d followed him, you’d have no shirt on your back, today..He’s all hype, no sense